The tower at 111 Wall St. is a symbol of the current crisis facing the commercial real-estate market in Manhattan, as well as the city itself. Despite its significant transformation from an unattractive structure into a downtown gem, the tower’s owners face significant challenges due to a decline in demand for office space. Nightingale Group and Wafra Capital Partners purchased the 1.2 million-square-foot tower on a $175 million long-term leasehold in 2019 after Citigroup moved out. At that time, financial and media companies were seeking lower-priced alternatives to brand-new towers, and people were not yet aware of the impact of the coronavirus or the shift to remote work.
The owners invested almost half a billion dollars in the property, including a $100 million modernization and “repositioning” that transformed the building with a bronze-trimmed curtain-glass facade, impressive tenant amenities, state-of-the-art electronics and mechanical systems, and East River views. Additionally, the owners invested $220 million more for the land underneath the tower in 2021. However, even with its gleaming profile and many improvements, the tower may not be enough to lure tenants to 111 Wall because of the city’s highest office vacancy rate of 21% downtown.
Moreover, the building will need to compete with other nearby properties, such as 60 Wall St., that are also empty or near-empty. One broker commented, “I don’t know of any company that’s moving to the area between Water Street and the river,” suggesting that the building’s prospects are grim. The story of 111 Wall St. is reminiscent of the situation across the city, where owners and investors are holding onto buildings and waiting for demand to increase.
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